Kub Nursery is a company that specializes in providing baby furniture, and the company cares about design and creates furniture that helps to make a nursery a warm, stylish and fun place for the child to grow and play. The SBU’s (Strategic Business Units) for Kub Nursery are focused on the baby furniture market, which is created by a big enough market niche for baby furniture products. The aim of the report is to conduct market audit analysis of Kub Nursery. According to Kotler et al (2008), a marketing audit is a comprehensive, systematic, independent and periodic examination of a company’s environment, objective strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company’s marketing performance. External environment analysis, internal environment analysis and SWOT analysis are key elements to be included in market audit.

External Environment

External environment analysis in this section consists of PESTEL and Porters’ 5 Forces analysis. On the one hand, the PESTEL analysis is macro audit that focuses on six key aspects including political, economic, social-cultural, technological, legal and environmental factors (Blythe and Megicks, 2011). Kub Nursery operates in the industry of baby furniture and PESTEL is used to analyze macro environment of baby furniture industry. Firstly, political factors have a positive effect on the industry of baby furniture because political environment in the UK is stable to support the development of the industry. Secondly, economic environment has a negative effect on the development of the baby furniture industry because currently many countries including the UK are experiencing economic depression and people’s willingness of consumption has been greatly reduced due to the poor economic environment and the reduction in income.

Thirdly, social-cultural changes have a positive effect on the industry of baby furniture that parents pay growing attention to the health and safe of their children. Fourthly, technological factors play an important role in driving the development of baby furniture industry because technological innovation makes it possible to provide customers with healthier and safety baby furniture products. Fifthly, legal factors are critical to influence the development of the baby furniture industry because there are high requirements of laws and regulations on security and health of baby furniture and products have to meet the relevant legal requirements. Lastly, people have paid gradual attention to environmental protection so that companies in the baby furniture industry have to attach importance to the use of raw materials and recycling of old furniture.

On the other, the micro audit of Porters’ 5 forces is used to analyze the micro environment of the baby furniture industry and Kub Nursery. According to Porter (1980), Porters’ 5 forces framework consists of five aspects including the buyer’s bargaining power, the supplier’s bargaining power, the threat of new entrants, the threat of substitutes and competitive rivalry. Firstly, the buyer’s bargaining power is weak in the baby furniture industry because there is small volume of customers and there are few substitute products and baby furniture products are vital to health and safe of the children. Secondly, the supplier’s bargaining power is relatively strong in the baby furniture industry because the products have high requirements on materials and wood is the important resource to be controlled by the government.

Thirdly, the threat of new entrants is big in the baby furniture industry because the barriers are low for new companies to enter this market. Fourthly, the threat of substitutes is also big in the baby furniture industry because technological innovations may lead to new substitutes of baby furniture to build nursery for the child. Lastly, the competition is intensified in the baby furniture industry because low barriers and rapid growth of this market have attracted many companies to enter and compete in this market.

From the external environment analysis, stable political environment, social and cultural changes to pay more attention to the child, technological advancement and the weak buyer’s bargaining power provide opportunities to Kub Nursery. Poor economic environment, high legal and environmental requirements, strong supplier’s bargaining power, big threat of new entrants and substitutes and intensified competition produce threats to Kub Nursery.

Internal Environment

The Resource Based View model, a portfolio analysis using PLC and BCG matrix and marketing mix are used to analyze internal environment of Kub Nursery in this section. Firstly, the Resource Based View model analyzes superior performance, sustainable competitive advantage, core competencies, capabilities, tangible resources and intangible resources of an organization (Hollenson, 2010). Superior performance of Kub Nursery is that the company is market leader in the baby furniture market. Sustainable competitive advantage of Kub Nursery includes special care to the child. Core competencies of Kub Nursery include special design to grow with the child. Capabilities of Kub Nursery include special design, quality ensure, cost control and individualized services to the customers. Tangible resources of Kub Nursery include stores, technology, design, the suppliers and customer services. Intangible resources of Kub Nursery include brand, corporate values, recognition of the customers and innovation.

Secondly, a portfolio analysis of Kub Nursery is conducted based on PLC and BCG matrix. On the one hand, Product Life Cycle (PLC) divides the life of product into five main stages including introduction, growth, maturity, saturation and decline (McDonald and Wilson, 2011). The baby furniture is in the stage of growth that public awareness to the importance and necessity of baby furniture has increased greatly, sales volume of baby furniture products increases significantly, competition begins to increases with the entry of more and more new players in this market, market extends quickly and price continues to decreases due to reduced costs and the increased competition.

On the other hand, BCG matrix depends on market share and market growth to analyze market and classifies the market into four types including stars with high market share and high market growth, question marks with high market growth and low market share, cash cows with low market growth and high market share and dogs with low market share and low market growth (Gilligan and Wilson, 2003). Based on these four types of market, Kub Nursery is currently the type of stars that the baby furniture market is experiencing high growth and the company has high market share in the baby furniture market.

Thirdly, marketing mix is used to analyze Kub Nursery. According to Kotler et al (2008), marketing mix (7P’s) includes product, price, place, promotion, people, process and physical evidence. The product strategy of Kub Nursery focuses on design and quality and functionality and durability are important characteristics of its baby furniture products. The price of Kub Nursery does not really cost the earth and the company intends to provide the customers with perceived value. Stores and the website are two most important channels for Kub Nursery to distribute its products to the customers. Advertising, sales promotion and personal selling are three main promotion strategies to be adopted by Kub Nursery and sales promotion such as facebook competition through the website is generally used by the company to attract more customers. Kub Nursery pays attention to the training of the staff to enhance their skills, attitudes and quality in providing service in order to provide the customers with high quality services. As to the process, there is gap between payment and delivery for the customers of Kub Nursery that the customers have to pay first and dealers in store will order the furniture from Kub Nursery for them. Kub Nursery not only provides the customers with a good trading environment in stores but also tries to provide a good internet trading environment.

From the internal environment analysis, special design, quality ensure, cost control and individualized services to the customers and market leader in a high growth market lead to strengths of Kub Nursery. Poor strategies in marketing mix such as distribution, promotion and process management lead to weaknesses of Kub Nursery.

SWOT Analysis

The SWOT analysis focuses on strengths, weaknesses, opportunities and threats of an organization (Brassington and Pettitt, 2006). Firstly, strengths of Kub Nursery are focused on the design and good quality of its products that can provide special care to the child through providing durable and functional baby furniture and the reasonable prices of its product. Secondly, weaknesses of Kub Nursery are realized in the limited types of its products, the gap between payment and delivery and the company’s poor marketing strategies in promoting its products. Thirdly, opportunities faced by Kub Nursery are mainly from the rapid growth of the baby furniture market with the growing attention to the care of child. Lastly, threats faced by Kub Nursery are mainly from the competition that the company has to face more intensified competition with the entry of more and more companies in this market.

Conclusion

According to marketing audit of Kub Nursery, findings show that firstly, special design, quality ensure, cost control and individualized services to the customers and market leader in a high growth market lead to strengths of Kub Nursery. Secondly, poor strategies in marketing mix such as distribution, promotion and process management lead to weaknesses of Kub Nursery. Thirdly, stable political environment, social and cultural changes to pay more attention to the child, technological advancement and the weak buyer’s bargaining power provide opportunities to Kub Nursery. Fourthly, poor economic environment, high legal and environmental requirements, strong supplier’s bargaining power, big threat of new entrants and substitutes and intensified competition produce threats to Kub Nursery. (1569 words)

The vision of KUB Nursery is to establish a warm, stylish and fun place for your child to grow and play. Mission: the company wants to be the excellent baby furniture provider, with focusing on product design, quality and customer service and highlighting both functionality and durability (http://www.kubnursery.com/index.php).

SWOT analysis

The SWOT analysis portrays strengths, weaknesses, opportunities and threats of an organization (Brassington and Pettitt, 2006). Strengths: KUB Nursery advances functional and durable property. It takes the advantage of social media-Facebook and Twitter-in order to make free advertisement and catch new customers. Furthermore, the firm highlights customer’s value co-creation and is its service awareness-free delivery (Bowman and Ambrosini, 2000). Weakness: the business is limited within UK and Ireland, relatively narrow consumer scope and geographic market. There are only a few types of its products. The gap between payment and delivery, and the company’s poor promoting strategies are the barriers of future development. Opportunities: the increasing attention of baby product from parents, the more mature and segmented furniture market, professional design and technical support. Threats: the company has to face more intensive competition with the entry of more and more companies in this market, lack of strong product feature (http://www.kubnursery.com/index.php).

increasing attention from parents, the more mature market, technical support

Intensive competition, lack of strong product image

Competitor analysis

IKEA is the well-known household furniture firm with the characteristics of low price, reliable quality and easy-shopping environment (Nirmalya, 2006). In comparison with IKEA, the products in KUB nursery seem more expensive and better quality. However, most consumers consider IKEA as the primary furniture manufacturer due to its strong brand value and affordable price.

Tutti Bambini is the another main supplier of baby furniture including swinging cribs, cots, cot beds, high chairs, baby mattresses and cot top changers. Tutti Bambini owns the similar quality standard but a broader range of product. The firm is seen to focus on the differentiation strategy where customers can find more options (http://www.tuttibambini.co.uk/).

Lullabys is a one stop shop for customers to buy nursery & baby products for newborns to three years old. Comparing with KUB, Lullabys has multi-brand with wider product range, such as pushchair, playtime and feeding products. However, Lullabys uses less advertising and promotion than KUB. It offers a consuming efficiency since parents can find almost everything in this store (http://www.lullabys.co.uk/).

BCG matrix is composed four areas: star, cash cow, question mark and dog via analyzing market share and market growth analysis (Grant, 2010). KUB’s market share is increasing but relatively low while the market of baby/children furniture poses a fasting growing area. The current situation of KUB is the question star in BCG with a potential of enlarging market share. If considering the perceptual mapping, KUB might be in the area of high quality and high price. In addition, taken general strategy into account, KUB adopts the strategy type as focused strategy since the company chose a specific and niche segment-baby furniture (Grant, 2010). The competitive advantage of KUB is reliable quality, fancy design, customer awareness, service sense.

Ansoff matrix consists of market penetration, product development, market extension and diversification according to the new or existing market and product (Kotler and Armstrong, 2007). Baby furniture is the existing product while the market can be defined as a niche-the new market. Hence, in line with the Ansoff matrix, the market objectives can be categorized as market extension. The firm should educate the consumers that baby furniture market has been building up where they can find the product with full portfolio, good design and reliable quality.

Short-run strategy

From the short run, the firm could start from enlarging current market for baby furniture to other European countries. Moreover, paying attention to brand building, hence it can attract potential customer and also facilitate the exploration of the market abroad. A near future marketing strategy is recommended with the departure of marketing mix, in terms of product, price, place and promotion.

First, increase product portfolio and differentiation. KUB is concentrating on the furniture’s R&D and manufacturing, however, the baby product is a rather broad market. As its competitors do, KUB should enrich the product portfolio, e.g. car seat. The company could cooperate with other firms who specialize in children cloth and toys to develop the baby cloth and baby toys. Second, properly reduce the unit price by scale of economy and outsourcing. The firm can emphasize the core business (product R&D, marketing and service management) and outsource the manufacturing activity to for example, Eastern Europe; the cost can be decreased to a large extent. On the other hand, baby furniture tends to be more expensive than normal adult’s due to the rigid quality and safety standard. In a multi-kid home, it might account for the main expense and hinder the further consumption for Children product.

Third, develop more channels for sale, such as physical store and online selling. KUB also could collaborate with local household retailer and major e-business players to improve the purchasing convenience. Last, launch multi-promotion methods by discount, bundling sale, volume and so on. When buying bed and sofa together, the bundling price is much cheaper. The more customers buy the big discount they could have. Ordinary discount for products, a set of product on sale per week as well as on festivals or big days, for instance, the baby’s birthday the product can be offered in a special discount.

Market profile and target customers

The target market should be with a few more baby furniture providers and aware customers. The customers can be young couples and small-kid parents with certain knowledge of children furniture. They care more about the quality standard and reliability rather the price issue. They make the final decision by a thorough consideration of quality, design and cost. They are close to internet and new media so that the baby product firms could take advantage of Facebook, Twitter and other tools. Other price promotion is also important which could be adopted accordingly. Those young parents, in addition, like unique product; hence, the furniture firms could focus more on differentiation and personalization.